Sunday, February 25, 2018

Forex Tip: Trading with the News

Trading Forex with the news is very unpredictable. Personally, I don’t like unpredictable and irrational events. Not just in Forex, but anything in life. It makes me feel stupid. So my best defense against irrational, unpredictable events will be stay away from them. I mean, will you like to take a lift from a drunk driver or a flag a sober taxi driver? No matter how good that driver is, being drunk doesn’t mean you can do things better…

So, the basic strategy to deal with major news is to Avoid Them. When it comes to news, there is a “forecast” and a “previous” number listed before the news is announce. The trouble lies in the assumption of the Forex traders will respond the same way the relation between the actual number, forecast number and the previous number. It will be extremely hard to make any trades during this period of chaotic time because the forex market is moving too fast.

In my point of view, these announcements have few long term significances and extremely unpredictable in the short term. Some Forex traders may achieve some profits using these figures. However, I have yet to heard or read any success stories that you can profit with these announcement figures in the long run.

One thing that is constantly happening when major news has been announced. The extremely fast price movements. These price movements can be so unpredictable that it looks like it going to be one direction but it goes back the point where it all started just as fast.

These price movements are so irrational that they totally ignore the logic of the news itself. The movements also brush aside the logic of the technical analysis we learn. To simply put it, news makes traders to become irrational. Take note the timing of these major announcements and do not place any trade before these announcements.

Wait till the pattern completed farther away and the market has calm down to enter any trade. If you have make any trade before the news announcement, it will be wise to close it before it comes out, hopefully with a little profit. Trading with the News is simply too risky.

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